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1 You submitted this quiz late, and your answers may not have been recorded. Published Preview Edit Assignment Unit06 This is a preview of the draft version of the quiz Quiz Type Points Assignment Group Shuffle Answers Time Limit Multiple Attempts Score to Keep Attempts View Responses Show s One Question at a Time Graded Quiz 30 Assignments No No Time Limit Yes Highest Unlimited Always Immediately No Due For Available from Until Feb 28 Everyone Mar 1 at 11:59pm Take the Quiz Again

2 Score for this attempt: 0 out of 30 Submitted Mar 2 at 9:28am This attempt took less than 1 minute. Question 1 If the 30 year Treasury bond interest rate is 10%, and the 90 day Treasury bond interest rate is 5%, what is the interest rate spread? 2% 5% 6% 15% Answer: Interest rate spread = long term rate short term rate=10% 5%=5% Question 2 If the 30 year Treasury bond interest rate is 10%, and the 90 day Treasury bond interest rate is 5%, which direction is future interest rate going to go?

3 future interest rate is likely to go up future interest rate is likely to go down future interest rate is likely to stay the same Question 3 There are 9 questions in this group. For convenience the information is repeated for each question. The table below presents information on national debt, gross domestic products (GDP), and Consumer Price Index (CPI) for selected years. At the nominal value (not adjusting for inflation), how much has U.S. national debt increased from 1995 to 2005? National Debt $5.0 trillion $7.9 trillion $17.8 trillion GDP $7.4 trillion $12.5 trillion $16.8 trillion CPI Less than 50.0% Between 50.0% and 55.0% Between 55.1% and 60.0% More than 60.0%

4 Answer: 7.9 trillion / 5 trillion 1 = 58.0% Question 4 The table below presents information on national debt, gross domestic products (GDP), and Consumer Price Index (CPI) for selected years. At the nominal value (not adjusting for inflation), how much has U.S. national debt increased from 2005 to 2013? National Debt $5.0 trillion $7.9 trillion $17.8 trillion GDP $7.4 trillion $12.5 trillion $16.8 trillion CPI Less than 100.0% Between 100.0% and 110.0% Between 110.1% and 120.0% More than 120.0% Answer: 17.8 trillion / 7.9 trillion 1 = 125.3%

5 Question 5 The table below presents information on national debt, gross domestic products (GDP), and Consumer Price Index (CPI) for selected years. Adjusting for inflation, how much has U.S. national debt increased from 1995 to 2005? National Debt $5.0 trillion $7.9 trillion $17.8 trillion GDP $7.4 trillion $12.5 trillion $16.8 trillion CPI Less than 18.5% Between 18.5% and 20.5% Between 20.6% and 22.5% Between 22.6% to 24.5% More than 24.5% Answer: 2005 National Debt expressed in 1995 dollar value = 7.9 trillion * (152.4/195.7)=6.15 trillion. % increase adjusting for inflation = 6.15/5.0 1=23.0% Question 6

6 The table below presents information on national debt, gross domestic products (GDP), and Consumer Price Index (CPI) for selected years. Adjusting for inflation, how much has U.S. national debt increased from 2005 to 2013? National Debt $5.0 trillion $7.9 trillion $17.8 trillion GDP $7.4 trillion $12.5 trillion $16.8 trillion CPI Less than 91.5% Between 91.5% and 92.5% Between 92.6% and 93.5% More than 93.5% Answer: 2013 National Debt expressed in 2005 dollar value = 17.8 trillion * (195.7/232.9)=15.0 trillion. % increase adjusting for inflation = 15.0/7.9 1=89.90% Question 7 The table below presents information on national debt, gross domestic products (GDP), and Consumer Price Index (CPI) for selected years. What was national debt as a percentage of GDP in 1995? National Debt $5.0 trillion $7.9 trillion $17.8 trillion

7 GDP $7.4 trillion $12.5 trillion $16.8 trillion CPI Less than 60.00% Between 60.00% and 65.00% Between 65.01% and 70.00% More than 70.00% Answer: In 1995, national debt as a percentage of GDP = 5.0/7.4=67.6% Question 8 The table below presents information on national debt, gross domestic products (GDP), and Consumer Price Index (CPI) for selected years. What was national debt as a percentage of GDP in 2005? National Debt $5.0 trillion $7.9 trillion $17.8 trillion GDP $7.4 trillion $12.5 trillion $16.8 trillion CPI Less than 59.0% Between 59.0% and 60.0%

8 Between 60.1% and 61.0% Between 61.1% and 62.0% More than 62.0% Answer: In 2005, national debt as a percentage of GDP=7.9/12.5=63.2% Question 9 The table below presents information on national debt, gross domestic products (GDP), and Consumer Price Index (CPI) for selected years. What was national debt as a percentage of GDP in 2013? National Debt $5.0 trillion $7.9 trillion $17.8 trillion GDP $7.4 trillion $12.5 trillion $16.8 trillion CPI Less than 100.0% Between 100.0% and 110.0% Between 110.1% and 120.0% More than 120.0%

9 Answer: In 2013, national debt as a percentage of GDP = 17.8/16.8=106.0% Question 10 The table below presents information on national debt, gross domestic products (GDP), and Consumer Price Index (CPI) for selected years. As a percentage of GDP, has national debt increased, unchanged, or decreased from 1995 to 2005? National Debt $5.0 trillion $7.9 trillion $17.8 trillion GDP $7.4 trillion $12.5 trillion $16.8 trillion CPI increased unchanged decreased Question 11 The table below presents information on national debt, gross domestic products (GDP), and Consumer Price Index (CPI) for selected years. As a percentage of GDP, has national debt increased, unchanged, or decreased from 2005 to 2013?

10 National Debt $5.0 trillion $7.9 trillion $17.8 trillion GDP $7.4 trillion $12.5 trillion $16.8 trillion CPI increased unchanged decreased Question 12 Which of the following is NOT a partial answer to why the economy goes through ups and downs? good supply shocks bad supply shocks Federal Reserve fine tuning All of the above are partial answers. Question 13

11 Which of the following is a reason as to why the Fed does fine tuning? to have fun to mess with people s mind to counteract bad supply shocks to help the incumbent president get high approval rating Question 14 When the Feb wants to slow down the economy, it carries out a loose monetary policy and increases money supply tight monetary policy and decreases money supply loose monetary policy and decreases money supply tight monetary policy and increases money supply

12 Question 15 Why would the Fed ever want to slow down the economy? to slow down GDP growth to slow down inflation to decrease unemployment rate to increase interest rate Question 16 Which one of the following events is NOT a bad supply shock? droughts strikes embargoes a period of mild weather

13 Question 17 When the Feb wants to stimulate the economy, it carries out a loose monetary policy and increases money supply tight monetary policy and decreases money supply loose monetary policy and decreases money supply tight monetary policy and increases money supply Question 18 Budget deficits can be used to predict an increase in either inflation or interest rate. True False

14 Question 19 Federal budget deficit is. federal expenditure federal tax revenue. federal expenditure + federal tax revenue. federal expenditure / federal tax revenue. none of the above is correct. Question 20 The federal government makes up the deficit by borrowing in the form of sale of Treasury securities and U.S saving bonds. True False Question 21

15 If the 30 year Treasury bond interest rate is 5%, and the 90 day Treasury bond interest rate is 6%, what is the interest rate spread? 1% 1% 11% Answer: Interest rate spread = long term rate short term rate=5% 6%= 1% Question 22 If the 30 year Treasury bond interest rate is 5%, and the 90 day Treasury bond interest rate is 6%, which direction is future interest rate going to go? future interest rate is likely to go up future interest rate is likely to go down future interest rate is likely to stay the same Question 23

16 We can use supply shocks to forecast economic ups and downs. True False Question 24 The U.S. Federal Reserve system does fine tuning of the economy because it tries to counteract bad supply shocks it tries to enhance good supply shocks it tries to keep the unemployment rate below 10% all of the above. Question 25 A tight monetary policy by the Feb means

17 money supply will increase money supply will be unchanged money supply will decrease Question 26 What is the long run effect of Fed's loose monetary policy? inflation rate will go down inflation rate will go up inflation rate will stay the same inflation rate will change in a random fashion Question 27 National debt is federal expenditure minus federal tax revenue

18 federal tax revenue minus federal expenditure federal budget deficits for the past 20 years the current sum of all outstanding budget deficits. Question 28 As of 2013, U.S. national debt has exceeded U.S. GDP. True. False. Question 29 In the past 20+ years, U.S. national debt is in the. millions billions trillions

19 zillions Question 30 U.S. has a trade deficit if Americans buy more imported products than U.S. producers are able to sell to foreign buyers. Americans buy less imported products than U.S. producers are able to sell to foreign buyers. American government buys more imported goods than foreign governments buy American goods. American government buys less imported goods than foreign governments buy American goods. Quiz Score: 0 out of 30

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